95-21842 Reso R
RESOLUTION NO. 95-21842
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA AUTHORIZING AND DIRECTING
THE MAYOR AND CITY CLERK TO EXECUTE THE ATTACHED
AMENDMENT TO THAT CERTAIN LETTER OF INTENT BY AND
BETWEEN THE MIAMI BEACH REDEVELOPMENT AGENCY,THE CITY
OF MIAMI BEACH, FLORIDA, ST. MORITZ HOTEL CORPORATION
AND LOEWS HOTELS HOLDING CORPORATION,PERTAINING TO THE
DEVELOPMENT OF A CONVENTION CENTER HOTEL AND PARKING
GARAGE.
WHEREAS, St. Moritz Hotel Corporation("SMHC") was the winning bidder in response
to the Convention Center Hotel Request for Proposals; and
WHEREAS, the Miami Beach Redevelopment Agency (the "RDA"), the City of Miami
Beach, Florida(the "City"), SMHC and Loews Hotels Holding Corporation("LHHC") executed a
Letter of Intent(the "LOI") pertaining to the development of an approximately 800 room hotel (the
"Hotel")at and near 16th Street east of Collins Avenue, Miami Beach and an approximately 800 car
garage(the"Garage")at or near 16th Street between Collins and Washington Avenues, Miami Beach;
and
WHEREAS, negotiations are proceeding on numerous agreements relating to the
development of the Hotel and Garage; and
WHEREAS,the LOI provides that if the agreements for the development of the Hotel and
Garage are not executed by the RDA and SMHC prior to December 15, 1995, the RDA or the City
may be responsible to reimburse SMHC for certain design expenses for the development of the Hotel
and the Garage; and
WHEREAS,due to, among other things,the work and time involved in connection with the
negotiation of numerous agreements, a bond issuance,bank financing and property acquisition related
to the Garage, the RDA, the City, SMHC and LHHC would like to execute the attached Amendment
to the LOI to extend the time by which the agreements must be executed and when liability for
reimbursement of design expenses might apply; and
WHEREAS,Section 12(h) of the LOI provides that the LOI may be amended by a written
agreement executed by both of SMHC and the RDA.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA as follows:
1. The Mayor and City Clerk are authorized and directed to execute the attached
Amendment to that certain Letter of Intent by and between the Miami Beach Redevelopment Agency,
the City of Miami Beach, Florida, St. Moritz Hotel Corporation and Loews Hotels Holding
Corporation.
2. This Resolution shall take effect immediately upon its passage.
PASSED AND ADOPTED this 6th day of December , 1995.
AIL _ 1
MA O'
ATTEST:
TY CLERK
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«\wpwin60\resos\amdagrmtses FORM APPROVED
Legal
By
Date lX/5105
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CITY OF MIAMI BEACH
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH FLORIDA 33139
COMMISSION MEMORANDUM NO. 897 95
TO: Mayor Seymour Gelber and
Members of the City Commission DATE: December 6 , 1995
FROM: Jose Garcia-Pedrosa
City Manager
SUBJECT:
A RESOLUTION UTHORIZING AND DIRECTING THE MAYOR AND CITY
COMMISSION 0 EXECUTE AN AMENDMENT TO THE LETTER OF
INTENT WITH ST. MORITZ HOTEL CORPORATION
RECOMMENDATION:
It is recommended that the City Commission/Redevelopment Agency
Board approve the attached Resolution amending the Letter of Intent
(LOI) to extend the date of signing of the Development Agreement
and other relevant documents with St. Moritz Hotel Corporation from
December 15, 1995, to no later than January 11, 1996 .
BACKGROUND:
The Miami Beach Redevelopment Agency' s (RDA' s) negotiating team and
St . Moritz Hotel Corporation have been diligently pursuing closure
on the convention hotel legal documents. The RDA' s outside
counsel, Squire, Sanders and Dempsey, have prepared drafts of the
hotel lease agreement and the garage development agreement . A
major negotiating meeting will occur in New York on December 11
through December 13, 1995 .
The Negotiating Team focused on resolving major substantive points
prior to full drafting of the agreements.
ANALYSIS:
The Letter of Intent, signed on May 3, 1995, contained a deadline
of December 15, 1995, to complete negotiations and have all
documents prepared.
AGENDA ITEM R f
DATE 12 -6-aS
This deadline has proved to be too ambitious due to the complexity
and enormity of the agreements necessary to conclude the deal . An
extension is necessary to provide sufficient time for a closing.
In the meantime, Loews will continue to expend funds for the design
development effort in order to remain on schedule to permit a
construction start in late spring and an opening by late 1997 . As
a result, Loews will be committing out of pocket funding far beyond
the $1 .6 million envisioned in the May LOI when a December 15, 1995
closing was presumed and is requesting an increase in the City' s
potential liability to cover these costs. The negotiating team has
reached an agreement with Loews to defer this request until the
City Commission/Redevelopment Agency meeting on January 10, 1996 at
which time the following should have occurred:
1) Loews will have a commitment letter for its $66 million
financial package with Bankers Trust.
2) The negotiating team will have concluded the major portion of
the ground lease during negotiation meetings in New York from
December 10 to December 13 , 1995 .
3) The hotel development agreement will have been drafted and
reviewed and in final stages of completion.
Therefore, at the January 10, 1996 Commission/Redevelopment Agency
meeting, the negotiating team expects to be able to better advise
the Commissioners/Redevelopment Agency Board of the anticipated
timetable for closing the deal, and the increased design
development costs that will be incurred through closing to assure
a late spring start.
Additionally, Rod Eisenberg has served a Notice of Appeal regarding
the Summary Judgment granted to the City and the County in the
lawsuit he had filed contesting the establishment of the City
Center Redevelopment Area.
Because the December 15, 1995 deadline is upon us, the
Administration recommends an interim extension of the LOI deadline
to January 11, 1996, with the understanding that prior to January
11, 1996, terms for the actual extension can be negotiated and
brought back to the Commission/RDA Board.
REVENUE IMPACTS TO THE CITY:
The signing of the Agreements will trigger the extra one penny bed
tax. The Administration had contemplated the signing of documents
in December when the resort tax budget was prepared earlier this
year. For this reason, the Administration is very concerned about
the extent of any delay.
The postponement of the deadline will cause the City' s projected
revenues to be reduced from the $1 . 6 million estimated in the
City' s budget for this fiscal year. One half of this money is
committed to funding of the debt service for the hotel, so that the
diminution of potential revenues to the City is actually less.
This "paper impact" to the City must always be evaluated in light
of the negative consequences of rushing to negotiate to an
artificial deadline, resulting in less favorable financial terms to
the City. Nevertheless, the Administration will push aggressively
to minimize any delays.
CONCLUSION:
The City Commission/Redevelopment Agency should approve the
amendment to the Letter of Intent as recommended by the negotiating
team.
JGP/HSM: jph
Attachments